JK Tyre & Industries Ltd. (JKTYRE) - Auditors Report

Company auditors report

To the Members of

JK Tyre & Industries Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of JK Tyre& Industries Limited ("the Company") which comprise the Balance Sheet as at31st March 2017 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Cash Flows and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation (herein after referred to as "Standalone Ind AS financialstatements").

Management's Responsibility for the Standalone Ind AS Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards (Ind AS) prescribedunder Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalone Ind AS financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthe standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the standalone I nd ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone I nd AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including the Ind AS of thefinancial position of the Company as at 31st March 2017 and its financial performanceincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure A a statement on the matters specified in the paragraph 3 and 4 of theOrder.

2. As required by Section 143(3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The balance sheet the statement of profit and loss the statement of cash flowsand the statement of changes in equity dealt with by this Report are in agreement with thebooks of accounts.

(e) On the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164 (2) of the Act.

(f ) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements  Refer Note No. 34 37 &39 to the standalone Ind AS financial statements.

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealings in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016 and these are in accordance with the books ofaccounts maintained by the Company - Refer Note No. 57 to the standalone Ind AS financialstatements.

For LODHA & CO.

Chartered Accountants

Firm's Registration No. 301051E

(N. K. LODHA)

Partner

New Delhi the 15th May 2017

Membership No. 85155

Annexure  A to the Auditor's Report

The Annexure referred to in Independent Auditor's Report to the members of the Companyon the standalone Ind AS financial statements for the year ended 31st March 2017 wereport that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.

(b) The fixed assets have been physically verified by the management according to theprogramme of periodical verification in phased manner which in our opinion is reasonablehaving regard to the size of the company and the nature of its fixed assets. Thediscrepancies noticed on such physical verification were not material.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties are inthe name of the Company.

(ii) The inventories of the Company (except stock lying with the third parties and intransit for which confirmations have been received/ material received) have beenphysically verified by the management at reasonable intervals and the procedures ofphysical verification of inventory followed by the Management are reasonable in relationto the size of the Company and nature of its business. The discrepancies noticed on suchphysical verification of inventory as compared to book records were not material.

(iii) According to the records and information and explanation made available to usthe Company has not granted any loans secured or unsecured to companies firms LLP andother parties covered in the register maintained under section 189 of the Companies Act2013 ("the Act"). However Outstanding year-end balance of deferred receivablefrom a company is Rs. 75.79 crores related to past year transaction under the CompaniesAct 1956 and:

(a) Terms and conditions of such transaction are not prejudicial to the interest of theCompany.

(b) In respect of aforesaid receivable receipts of principal as well as interestaccrued thereon are as per stipulated terms and conditions.

(c) There is no overdue amount in respect of principal and interest.

(iv) According to the information explanations and representations provided by themanagement and based upon audit procedures performed we are of the opinion that inrespect of loans investments guarantees and securities the Company has complied withthe provisions of section 185 and 186 of the Act.

(v) In our opinion and according to the information and explanations given to us theCompany has complied with the directives issued by the Reserve Bank of India and theprovisions of Section 73 to76 of the Act or any other relevant provisions of the Act andthe rules framed there under with regard to deposits accepted from the public. We havebeen informed that no order has been passed by the Company Law Board or National CompanyLaw Tribunal or Reserve Bank of India or any Court or other Tribunal in this regard.

(vi) We have broadly reviewed the books of account maintained by the company pursuantto the rules made by the Central Government for the maintenance of the cost records undersection 148(1) of the Act in respect of the company's products to which the said rules aremade applicable and are of the opinion that prima facie the prescribed records have beenmade and maintained. We have however not made a detailed examination of the said recordswith a view to determine whether they are accurate or complete.

(vii) (a) According to the records of the company the company is regular in depositingundisputed statutory dues including provident fund employees' state insurance incometax sales tax service tax custom duty excise duty value added tax entry tax cessand other material statutory dues with the appropriate authorities to the extentapplicable and there are no undisputed statutory dues payable for a period of more thansix months from the date they become payable as at 31st March 2017.

(b) According to the records and information & explanations given to us certaindues in respect of income tax sales tax service tax excise duty value added tax entrytax cess and custom duty that have not been deposited with the appropriate authority onaccount of dispute and the forum where the dispute is pending are given below: -

Name of the Statute

Nature of the dues

Forum where dispute is pending

Amount (Rs. in Lacs)

Sales Tax Act

Sales Tax

Additional Commissioner (Appeals)

8.13

Deputy Commissioner/ Deputy

1946.66

Commissioner (Appeals)

Revision Board

14.57

Joint Commissioner

0.96

Tribunal

46.89

High Court

1.80

Appellate Tribunal

3.41

Central Excise Act

Excise Duty

Commissioner-Appeals

89.41

Additional Commissioner

52.34

Additional Superintendent

0.47

CESTAT

312.57

Assistant Commissioner /

2.54

Deputy Commissioner

High Court

0.49

Custom Act

Custom Duty

Supreme Court

241.15

High Court

1558.33

Income Tax Act

Income Tax

Deputy Commissioner

1563.98

Finance Act

Service Tax

Assistant Commissioner

104.32

CESTAT

55.01

Madhya Pradesh Entry

Entry Tax

Commissioner

139.51

Tax Act 1976

(viii) I n our opinion on the basis of audit procedures and according to theinformation and explanation given to us the company has not defaulted in repayment ofloans and borrowings to financial institutions banks government (both State andCentral). The company did not have any outstanding debentures during the year.

(ix) On the basis of information and explanation given to us term loans have beenapplied for the purposes for which they were obtained other than temporarily parked inFixed Deposits with bank pending utilisation. The Company did not raise any money by wayof further public offer (including debt instruments).

(x) Based on the audit procedures performed and on the basis of information andexplanations provided by the management no fraud by the Company and no fraud on theCompany by its officers or employees has been noticed or reported during the course of ouraudit.

(xi) On the basis of records and information and explanations made available and basedon our examinations of the records of the company the company has paid / providedmanagerial remuneration in accordance with the requisite approvals mandated under Section197 read with schedule V of the Act. (Note No. 48(II)).

(xii) The Company is not a chit fund or a nidhi / mutual benefitfund / Societytherefore the provisions of clause 4(xii) of the said Order are not applicable to theCompany hence we are not offering any comment.

(xiii) As per the information and explanations and records made available by themanagement of the company and audit procedures performed for the related partiestransactions entered during the year the Company has complied with the provisions ofsection 177 and 188 of the Act where applicable. As explained and as per the records /details the related party transactions have been disclosed in the standalone Ind ASfinancial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us the Company has notmade any preferential allotment of shares or private placement of shares or fully / partlyconvertible debentures during the year in terms of provisions of section 42 of the Act.

(xv) On the basis of records made available to us and according to the information andexplanations given to us the Company has not entered into non-cash transactions withdirectors or persons connected with him. Accordingly paragraph 3(xv) of the Order is notapplicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 as the provisions of the section is not applicable to the company.

For LODHA & CO.

Chartered Accountants

Firm's Registration No. 301051E

(N. K. LODHA)

Partner

New Delhi the 15th May 2017

Membership No. 85155

Annexure  B to the Auditor's Report

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of JK Tyre& Industries Limited ("the Company") as of 31st March 2017 in conjunctionwith our audit of the standalone Ind AS financial statements of the Company for the yearended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI'). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies

Act 2013 to the extent applicable to an audit of internal financial controls bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the standalone Ind AS financial statements whether due to fraudor error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion theCompany has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.